The Square Foot

Target Selects Three Homburg Canada REIT's Locations

Homburg Canada Real Estate Investment Trust provided further details with respect to the three Zellers locations that have been selected by Target Corp. as part of its first-tranche sites. The REIT received a written commitment from Target Canada Inc., Target Corp.'s Canadian wholly-owned subsidiary ("Target Canada"), that the REIT's Zellers stores in Place Alexis Nihon (Montreal, Quebec), Place Longueuil (Longueuil, Quebec) and Cabot Square (St. John's, Newfoundland) will be converted into full Target stores. The three selected locations represent approximately 273,000 square feet of retail gross leasable area.

"We are pleased to welcome Target as an anchor tenant," said James Beckerleg, Chief Executive Officer of the REIT. "Target's election to convert three of the REIT's Zellers locations into Target stores further confirms the inherent quality and attractiveness of our retail portfolio. We are confident that the arrival of Target in our retail properties will positively impact traffic. This should enable us to achieve improved tenanting in our shopping malls, and could lead to further renovation opportunities at these locations. We certainly believe the benefits that Target will bring to our centres will more than compensate for lease adjustments provided to Target, which mainly consist of give-ups of modest future rent increases as well as percentage rent clauses that were never triggered by the Zellers lower per square foot sales. The REIT will also benefit from an improved covenant," Mr. Beckerleg concluded.

Target Canada's written commitment to the REIT provides for Target Canada to open full Target retail stores in the REIT's three selected existing Zellers locations pursuant to 60-year lease agreements (including options to renew), with no step-up or percentage rent clauses. The written commitment further provides for Target Canada to make a sizable investment in interior upgrades and/or exterior enhancement at each of the three locations, and possibly undertake site expansions at Place Alexis Nihon and Place Longueuil. At the Cabot Square location, the REIT has agreed to invest in a new roof and heating, ventilation and air conditioning systems and has maintained the right to construct additional square footage on land adjacent to the store. Target Canada will have the right to stop operating the three Zellers stores during the renovation period but will continue to pay its required rent.